The Egyptian pound is experiencing a decline against foreign currencies, nearing 50 per U.S. dollar following recent adjustments in subway fares and fuel prices. The Central Bank of Egypt reported that the currency reached 49.16 to the U.S. dollar on Tuesday, marking a significant shift from its previous range of 47 to 48 after being floated in March.
This fluctuation in exchange rates comes in the wake of the International Monetary Fund (IMF) completing its third financial review of Egypt, enabling the government to access $820 million as part of an $8 billion bailout loan aimed at bolstering the country's struggling economy. Egypt has been grappling with a shortage of foreign currency, surging inflation, and unrest in the Red Sea due to attacks by Yemen’s Houthi rebels.
The IMF acknowledged the Egyptian authorities' efforts to restore macroeconomic stability, noting that while inflation remains high, it is gradually decreasing. The flexible exchange rate regime remains a key component of the government's economic program.
In response to rising costs of fuel attributed to attacks in the Red Sea and currency depreciation, the Petroleum Ministry announced a fuel price hike of about 10%. This increase follows a previous adjustment in March and is part of the government's measures to address economic challenges.
Attacks by Houthi rebels on commercial ships in the Red Sea have disrupted trade routes crucial for transporting oil, natural gas, and other goods through the Suez Canal, a vital artery for global trade. These incidents have contributed to the economic strain faced by Egypt.
Furthermore, subway fares in Cairo have been officially raised, with the National Authority for Tunnels implementing new prices ranging from 2 to 5 Egyptian pounds. These adjustments are part of the government's efforts to meet the conditions set by the IMF for further financial assistance.
Egypt's agreement with the IMF earlier this year to increase the size of its bailout to $8 billion underscores the country's commitment to implementing necessary reforms to stabilize its economy amidst ongoing challenges.
